Effects of the Contract | Law of Contracts - CLAT PG PDF Download

Goods Perishing Before Making of Contract

A contract for the sale of specific goods is considered void if the goods have perished at the time the contract was made, without the seller's knowledge. The same applies if the goods are damaged to the extent that they no longer match the description in the contract.

Perishing of the Whole of the Goods:

• When specific goods are the subject of a contract of sale (whether actual sale or agreement to sell), and they perish without the seller's knowledge at or before the time of the contract, the contract is deemed void. This is based on mutual mistake regarding a crucial fact or the impossibility of performance, both of which make the agreement void from the beginning.

 Illustrations: 

• (a) A sold to B a specific cargo of goods supposed to be on its way from England to Bombay. It turned out, that before the day of the bargain, the ship conveying the cargo had been cast away and the goods were lost. Neither party was aware of the fact. The agreement was held to be void (Hastie vs Conturier).
• (b) A agrees to B to sell a certain horse. It turns out that the horse was dead at the time of bargain, though neither party was aware of the fact. The agreement is void.

Perishing of a Part of the Goods

When only a part of the goods in a contract for the sale of specific goods is destroyed or damaged, the effect of perishing depends on whether the contract is entire (indivisible) or divisible:

• If the contract is entire and only part of the goods has perished, the contract is void.
• If the contract is divisible, it is not void, and the buyer must accept the part that is available in good condition.

Illustrations:

• 1. There was a contract for the sale of a parcel containing 700 bags of Chinese groundnuts of different qualities. Unknown to the seller, 109 bags had been stolen at the time of the contract. The seller delivered the remaining 591 bags, and on the buyer's refusal to take them, brought an auction for the price. It was held that the contract, being indivisible, had become void by reason of the loss of the goods and the buyer was not bound to take delivery of 591 bags or pay for the goods (Barrow Ltd. vs. Philips Ltd.)
• 2. Perishing of Goods Before Sale but After Agreement to Sell (Sec. 8):
• Goods perishing after the agreement to sell but before the sale is affected: An agreement to sell specific goods becomes void if the goods perish or become so damaged that they no longer meet the description in the agreement before the risk passes to the buyer, without any fault on the part of the seller or the buyer.
•  Fault  refers to a wrongful act or default as defined in Section 2(5) of the relevant law.
• When there is an agreement to sell specific goods and the goods perish without any fault from either party before the risk has passed to the buyer, the agreement is rendered void. This provision is based on the principle of supervening impossibility of performance, making the contract void.
• If only a part of the goods agreed upon for sale perish, the contract becomes void if it is indivisible. However, if it is divisible, the parties are relieved from their obligations only to the extent of the goods that have perished, and the contract remains valid for the part that is in good condition.
• It is important to note that if the fault of either party leads to the destruction of the goods, the party at fault is liable for non-delivery or to pay for the goods, depending on the circumstances. Additionally, if the risk has passed to the buyer, they are obligated to pay for the goods even if they are undelivered, unless otherwise agreed. Generally, risk passes with the property as per Section 26.

 Illustrations 

• A buyer took a horse on a trial for 8 days on the condition that if found suitable for his purpose, the bargain would become absolute. The horse died on the 3rd day without any fault of either party. Held, the contract, which was in the form of an agreement to sell, becomes void, and the seller should bear the loss (Elphick vs. Barnes).
• A had contracted to erect machinery on M's premises, with the price to be paid upon completion. During the course of the work, a fire completely destroyed both the premises and the machinery. It was determined that both parties were excused from further performance, and A was not entitled to any payment as the price was contingent on the completion of the entire work (Appleby vs. Myers).

Effect of Perishing of Future Goods

A present sale of future goods is considered an agreement to sell under Section 6(3) of the Sale of Goods Act. This raises the question of whether Section 8 applies to such contracts. The leading case of Howell vs. Coopland provides clarity on this issue. In this case, it was established that future goods, if sufficiently identified, are treated as specific goods. If these goods perish, the contract becomes void.

 Illustration from Howell vs. Coopland 

• In the case, C agreed to sell H 200 tons of potatoes to be grown on C's land.
• C planted enough land to produce the required quantity of potatoes.
• However, due to unforeseen circumstances, a disease affected the crop, and C could only deliver about 10 tons.
• As a result, the contract was deemed void because the specific future goods could not be delivered.

 Classification of Goods 

• Goods are defined in section 2(7) of the Sale of Goods Act, 1930, as every kind of movable property, including stocks, shares, crops, grass, and severable objects. This definition is supported by the explanations of movable and immovable property in the General Clauses Act, 1897.
• The focus here is on the interpretation of "goods" within the Sale of Goods Act, 1930, with a comparison between the legal positions in England and India.
• Due to the broad nature of the definition, the discussion is narrowed down to three key commodities that have been contentious: electricity, lottery tickets, and software programs.

 Definition of "Goods" 

•  According to Section 2 (7) of the Sale of Goods Act, "goods" refers to: 
•  Every type of movable property, excluding actionable claims and money. 
• Includes stock and shares, growing crops, grass, and items attached to or part of the land that are agreed to be severed before sale or under the contract of sale.

Definition of "Movable Property" 

• According to section 3(36) of the General Clauses Act 1897, "movable property" is defined as  "property of every description except immovable property." 
• Section 3(26) of the same Act explains that  "Immovable property includes land, benefits arising from land, and things attached to the earth or permanently fastened to anything attached to the earth." 

 Movable Property Explained 

• Movable property refers to anything that is not immovable property. Immovable property includes land and things permanently attached to it.
• For example, if something is attached to the land but can be separated from it, like timber when cut from trees, it is considered movable property.
• The key factors in determining the nature of property are  the nature of the property, the intention of the parties, and the terms of their contract. 
• In a legal case, it was shown that an oil engine attached to the ground but removable later is not considered immovable property.
• Property under the Sale of Goods Act refers to general ownership of goods, not just specific items. The term 'includes' broadens the definition to cover various goods specified in the interpretation clause.

 Case Examples: 

•  M/s Mukesh Kumar Aggarwal & Co. V. State of M.P.  : Timber is considered "goods" because it is severed from the land for sale, making it a commercial commodity.
•  Perumal v Ramaswami  : An oil engine, while attached to the earth and used until it's no longer needed, is not immovable property as it can be detached and moved.
•  Tata Consultancy Services v. State of Andhra Pradesh  : Property under the Sale of Goods Act refers to general property over goods, not just specific items. The term 'includes' in the definition expands the scope to cover various goods.

 Difference between English Law and Indian Law regarding the Definition of Goods 

The distinction between English law and Indian law in defining "goods" under the Sale of Goods Act is evident in their treatment of personal chattels and intangible commodities.

 Goods in English Law 

• According to  Section 61(1) of the Sale of Goods Act 1979  , English law classifies "goods" as personal chattels, which are divided into  "choses in possession" and "choses in action." 
• Only "choses in possession" are considered goods, while "choses in action," including items like shares, debentures, and bills of exchange, are excluded because they are actionable claims.

 Goods in Indian Law 

• In India, the definition of "goods" under  Section 2(7) of the Sale of Goods Act  is broader than in English law.
• Indian law includes stocks and shares within the definition of goods, encompassing a wider range of commodities.

 Electricity as Goods 

 Inclusion of Intangible Energy 

•  English Law:  Electricity is not considered "goods" under English law. Judicial decisions have referred to electricity as a "thing," "article," and "tangible personal property," but it has not been classified as "goods" for the purpose of the Sale of Goods Act. The legal possession of electrical energy is complex because it can only be kept or stored by altering the physical or chemical state of other property.
•  Indian Law:  In India, the legal perspective is different. The Calcutta High Court in the case of  Associated Power Co. v. R. T. Roy  ruled that electricity falls under the definition of "goods" in Article 366 (12) of the Constitution and Section 2 (7) of the Sale of Goods Act. This view was upheld in other cases, where electricity was deemed "goods" because it is capable of delivery, regardless of being tangible or intangible.
• The Law Commission of India recommended including electricity and water in the definition of "goods" under Section 2(7) of the Act.
• The Supreme Court, while interpreting the definition of "goods" in the Madhya Pradesh Sales Tax Act, concluded that "movable property" should not be narrowly defined. Electric energy, despite being intangible, has all the attributes of movable property such as transmission, transfer, delivery, storage, and possession.

 Debate on Applicability 

• There are differing opinions regarding the applicability of the Sale of Goods Act to electricity.
• Some commentators, like  Pollock & Mulla  , argue that the Act is not applicable to electricity because the public authority is not contractually obligated to supply electricity; rather, it is a statutory obligation.
• According to this view, the supply of electricity would not constitute a "sale" under the Act, and any failure on the part of the public authority to supply electricity would depend on the governing statute.

 Inclusion of Electronic T.V. Signals as Goods 

• In the case of  Jabalpur Cable Network Pvt Ltd v ESPN Software India Pvt. Ltd  , electronic T.V. signals, similar to electricity, are considered goods because they are in the form of energy.

Exclusion of Lottery Tickets from the Definition of "Goods" 

•  Lottery Definition:  A lottery is described as a chance to win a prize by paying a price, according to Black's Law Dictionary.
•  Lottery Tickets as Property:  Lottery tickets are considered movable property under the 'Act'. However, there is debate about whether they qualify as an actionable claim as per Section 3 of the Transfer of Property Act, 1882.

 Case of H. Anraj v. Government of Tamil Nadu 

• The Supreme Court case of H. Anraj v. Government of Tamil Nadu dealt with the nature of rights involved in a lottery ticket.
• It was determined that a lottery ticket involves two main rights:
  •  Right to Participate:  This right was considered a transfer of a beneficial interest in movable goods, falling under the category of a sale as per Article 366 (29-A) (d) of the Constitution.
  •  Right to Win:  This right was viewed as a chose in action and not classified as "goods" for sales tax purposes.

 Case of Sunrise Associates v. Government of NCT of Delhi 

• The ruling in H. Anraj was challenged in the case of Sunrise Associates v. Government of NCT of Delhi.
• In this case, it was determined that the sale of a lottery ticket constituted the sale of an actionable claim.
• The court argued that there is no distinction between the right to win and the right to participate in a lottery draw. The purchaser pays for the right to win, not for the right to participate.
• This led to the conclusion that both rights are future rights (infuturo), and the classification in H. Anraj was incorrect.
• As a result, lottery tickets were excluded from the definition of "goods".

 Sale of Incomplete Film 

• In the case of  State of Tamil Nadu v. Thiru Murugan Bros  , the sale of an incomplete film was determined to be considered goods, making the transaction subject to sales tax.
• It was deemed irrelevant that no copyright is acquired in such a scenario.

 Fixed Deposit Receipt as Goods 

• In the case of  State Bank of India v. Smt. Neela Ashok Naik  , it was ruled that a fixed deposit receipt qualifies as goods.
• Such receipts can be pledged as collateral security. If the bank loan is not repaid, the bank has the right to retain the fixed deposit receipt as collateral and initiate legal action for loan recovery.

Conundrum Surrounding Software Programs

The Supreme Court case of TCS v. State of Andhra Pradesh determined that a software program stored on a CD or floppy drive qualifies as a "good" for sales tax purposes. A software program consists of a set of instructions or commands given to a computer to perform a specific task. The main debate revolves around whether software programs, being products of human intellect, should be classified as "goods" under the law.

 St Albans City and District Council v. International Computers Ltd 

• In this case, it was emphasized that hardware is useless without software, and software's presence on a physical medium like a disk is a necessity.
• If a disk is sold and the program has a defect, the disk manufacturer could be held liable.
• Both the tangible disk and the software program fall under the definition of "goods."

 TCS Case and 'Canned Software' 

• The TCS case specifically addressed 'canned software,' where it was argued that once software is loaded onto a medium like a CD or floppy drive, it is no longer considered a work of intellectual creation.
• This is because the medium itself becomes a marketable commodity.
• The concept of "marketability" was crucial in determining whether something qualifies as a "good."
• Even "operational software" uploaded onto a hard disk retains its status as a tangible good.

 Inclusion of Computer Software as "Goods" 

• There has been debate about whether computer software should be classified as "goods" under the Uniform Commercial Code, 1952.
• Some argue that "custom designed" computer software is a labor-intensive service rather than a good.
• However, the sale of most software programs resembles the sale of consumer products and is often sold in pre-existing packages.
• Contracts for data processing services have been classified as contracts for services, not goods.
• Despite being intangible, "computer software" can be considered "goods" under the law.

 Exclusion of 'Money' from the Definition 

• Money and actionable claims are explicitly excluded from the definition of "goods" in S.2(7) of the Act because money serves as the medium of exchange during the sale of goods.
• As a result, money is viewed as something unique ('sui generis') rather than a chattel. However, a coin intended for sale as a curiosity item is considered a "good" because it is sold as a commodity, not as currency.

Classification of Goods

Goods can be classified into three categories:

1. Existing goods
2. Future goods
3. Contingent goods

1. Existing Goods 

• Existing goods are those that are physically present and in the possession of the seller at the time of sale.
• These goods are referred to in the contract of sale and are legally owned by the seller at the time the contract is formed.

 Types of Existing Goods 

• Specific Goods:
• Goods that are identified and agreed upon at the time of the contract are called specific goods.
• For example, if a seller agrees to sell a particular radio with a unique number to a buyer, it is a contract for specific goods.
• Ascertained Goods:
• This term, although not defined by law, is used to refer to specific goods selected from a larger set.
• For instance, if a seller has 500 apples and decides to sell 200 of them, those 200 apples are ascertained goods.
• Unascertained Goods:
• Goods that are not specifically identified or separated at the time of the contract are known as unascertained goods.
• These goods are defined by description only.
• For example, if a seller agrees to sell one bag of sugar from a lot of 100 bags, it is a sale of unascertained goods until a specific bag is selected for delivery.

The distinction between specific or ascertained goods and unascertained goods is important for determining the transfer of property from the seller to the buyer.

 2. Future Goods 

• Future goods are those that are to be manufactured, produced, or acquired by the seller after the contract of sale is made.
• Since these goods do not exist at the time of the contract, there cannot be a present sale.
• Future goods are defined in Section 2(6) of the Act as goods that will be either manufactured, produced, or acquired by the seller at the time the contract is made.
• Contracts for the sale of future goods are always agreements to sell, as there is no actual sale involved.
• For example, if a seller agrees to sell 1000 apples from their orchard once the apples are ripe, it is a sale of future goods.
• Similarly, if a seller agrees to sell all the milk their cow will produce in the coming year, it is a contract for the sale of future goods.

 3. Contingent Goods 

• Contingent goods are a subtype of future goods where the seller's acquisition of the goods depends on a contingency that may or may not occur.
• These goods are part of a sale contract with a contingency clause.
• For instance, if a seller agrees to sell apples from their orchard before the trees have produced any apples, the apples are considered contingent goods.
• The sale is dependent on the condition that the trees produce apples, which is uncertain.
• For example, if A agrees to sell specific goods on a particular ship to B, the delivery is contingent on the arrival of the ship with those goods.
• If the ship arrives but does not carry the specified goods, the seller is not liable.

Delivery of Goods 

Delivery of goods refers to the voluntary transfer of possession from one person to another. The process of delivery results in the goods coming into the possession of the buyer, and it can occur even when the goods are transferred to someone other than the buyer who is authorized to hold the goods on behalf of the buyer.

There are various forms of delivery:

 1. Actual Delivery 

• Actual delivery occurs when the goods are physically given into the possession of the buyer.

 2. Constructive Delivery 

• Constructive delivery involves the transfer of goods without a change in possession or custody. For example, if you pick up a parcel on behalf of a friend and agree to hold it for them, it is a constructive delivery.

 3. Symbolic Delivery 

• Symbolic delivery involves the transfer of a thing as a token for the transfer of another thing. For instance, handing over the key to a godown containing goods to the buyer constitutes symbolic delivery.

Document of Title to Goods 

As per Section 2(4) of the Act, a document of title to goods includes various documents used in the ordinary course of business as proof of possession or control of goods. These documents authorize the possessor to transfer or receive goods represented by the document.

• Examples of documents of title to goods include:
• Bill of lading
• Dock-warrant
• Warehouse keeper's certificate
• Railway receipt
• Multimodal transport document
• Warrant or order for delivery of goods

Mercantile Agent 
A mercantile agent, as defined in Section 2(9) of the Act, is someone with the authority in the customary course of business to sell or consign goods under a contract on behalf of one or both parties. Examples of mercantile agents include auctioneers, brokers, and factors.

Property 
In the context of the Act, property refers to ownership or general property, which encompasses all ownership rights of the goods. A sale involves the transfer of ownership of goods from the seller to the buyer or an agreement to do so.

Insolvent 
An insolvent person, as defined in Section 2(8) of the Act, is someone who ceases to pay debts in the ordinary course of business or cannot pay debts as they become due, regardless of whether they have committed an act of insolvency.

Price 
In the Act, price refers to the money consideration for the sale of goods.

Quality of goods
As mentioned in Section 2(12) of the Act, refers to the state or condition of the goods.

Legal Principles regarding Transfer of Goods 

Transfer of Property in Sale of Specific or Ascertained Goods 

Sections 19 to 22 of The Sale of Goods Act, 1930 govern the transfer of property in specific or ascertained goods.

Property when Intended to Pass (Section 19) 

• In a contract for the sale of specific or ascertained goods, the property is intended to pass at a specified time agreed upon by both parties.
• The circumstances and conduct of both parties, along with the terms of the contract, are crucial in determining the true intention regarding the transfer of property.
• In the absence of an alternate intention, the principles outlined in Sections 20 to 24 help ascertain when the goods will transfer from the seller to the buyer.

Specific Goods in a Deliverable State (Section 20) 

• Section 20 of The Sale of Goods Act, 1930 deals with specific goods in a deliverable state.
• In an unconditional contract for the sale of specific goods, the property transfers from the seller to the buyer at the time of contract formation, provided the goods are in a deliverable state.
• Delays in payment or delivery do not affect the transfer of property.

 Example:  A selects a television from a shop and asks for delivery. The moment he makes the choice, he becomes the owner of the television.

Specific Goods to be Put into a Deliverable State (Section 21) 

• Section 21 of The Sale of Goods Act, 1930 states that for specific goods, the property passes to the buyer only when the seller puts the goods in a deliverable state.
• The seller must inform the buyer about the readiness of the goods.

 Example:  A orders a smart TV that needs an operating system installation. The TV becomes his property only after the installation is completed and the seller notifies him.

Specific Goods in a Deliverable State but Price to be Ascertained (Section 22) 

• Section 22 of The Sale of Goods Act, 1930 addresses specific goods in a deliverable state where the seller needs to determine the price.
• The seller must weigh, measure, test, or demonstrate the goods to ascertain their value.
• Property does not pass until these actions are completed and acknowledged by the buyer.

 Example:  If a seller agrees to assemble a wooden bed for the buyer, the property in the bed does not pass until the assembly is completed.

Transfer of Property in Sale of Unascertained Goods 

Section 23 of The Sale of Goods Act, 1930 governs the transfer of goods in cases where the goods are unascertained in nature.

Sale of Unascertained Goods by Description (Section 23(1)) 

• In a contract for the sale of unascertained goods by description, if goods of a specific description are appropriated by either the seller with the buyer's consent or the buyer with the seller's consent, the goods pass to the buyer.
• Consent can be expressed or implied and may occur before or after the appropriation.

Delivery to the Carrier (Section 23(2)) 

• If the seller delivers the property to the buyer, carrier, or bailee for transmission to the buyer without reserving disposal rights, the seller has unconditionally appropriated the property.

Goods Sent on "Sale or Return" 

When goods are disposed of on a "sale or return" basis, ownership is not transferred to the buyer until the buyer assents to the goods.

Goods Sent on Approval or "On Sale or Return" (Section 24) 

• In cases where goods are delivered to the buyer on approval, "sale or return," or similar terms, the goods pass to the buyer only if the buyer either consents, acknowledges to the seller, or takes some action to adopt the transaction.
• If the buyer holds the goods without expressing intent to reject them, ownership passes after a reasonable time or the expiration of the return period.

Example:  If a seller gives a necklace to a buyer on "sale or return" terms, the buyer becomes the owner only if he consents to the purchase. Otherwise, the necklace is returned to the seller.

Right to Disposal 

The right to disposal ensures that the value of the product is paid before ownership is transferred to the buyer.

Reservation of Right to Disposal (Section 25) 

• Section 25 of the Sale of Goods Act, 1930 addresses conditional appropriation of goods.
•  Section 25(1):  If the seller reserves the right of disposal in a contract for the sale of specific goods, the goods do not transfer from the seller to the buyer until the contract terms are fulfilled.
•  Example:  If a seller instructs a delivery person not to deliver goods until payment is made, the seller retains the right to disposal until payment is completed.

Section 25(3): 

•  Transfer of Property and Risk:  Section 25(3) outlines perspectives on the transfer of property during a sale of goods.
•  Possession vs. Passing of Goods:  Passing of goods refers to the transfer of ownership, while possession involves custody of goods. The provisions in Sections 18 to 25 of the Sale of Goods Act determine the rights and liabilities of the buyer and seller.

In the case of  Badri Prasad Vs. State of Madhya Pradesh  , the appellant's contract regarding certain forests in Madhya Pradesh was affected by the Abolition of Proprietary Rights Act. The court ruled on the vesting of forest and trees, and the distinction between ascertained and unascertained goods under the Sale of Goods Act.

In the case of Multanuak Chempalal vs. C.P Shah & Cov  , it was held that risk passes only after the property in the agreement has been transferred, and parties can contract for passing of risk before passing of property.

In the case of Hoogly Chinsurah Municipality vs Spence Ltd  , the municipality's contract with Spence Ltd for a tractor was disputed when the municipality rejected the tractor after use. The court ruled that property had passed to the municipality, and they could not reject the tractor.

The Sale of Goods Act, 1930 provides principles for the transfer of property in contracts for the sale of goods. Sections 18 to 25 determine the rights and liabilities of buyers and sellers, with passing of goods indicating transfer of ownership, distinct from possession, which involves custody of goods.

Nemo Dat Quod Non Habet - Section 27 

The principle of "Nemo Dat Quod Non Habet," which means "no one can give what they do not have," is a fundamental rule in property law. According to this principle, a seller cannot transfer a better title to the buyer than what they themselves possess. If the seller's title is flawed, the buyer's title will also be affected by the same flaw.

Key Points of Section 27 

• When goods are sold by someone who is not the owner and does not have the owner's permission to sell, the buyer cannot acquire a better title than what the seller had.
• This principle is rooted in the idea that a seller cannot give what they do not own.
• For example, if a thief sells stolen goods, the buyer only gets the same title the thief had, which is none.
• However, there are exceptions where a non-owner can transfer a better title, such as when a mercantile agent sells goods with the owner's consent.
• Section 27 aims to protect the rights of the true owner, ensuring that buyers cannot gain superior titles over the original owner's rights.

Exceptions to the Rule in Section 27 

•  Sale under Implied Authority:  When goods are sold under the implied authority of the owner, the buyer can acquire a good title even if the seller is not the owner.
•  Sale by Mercantile Agent:  A mercantile agent in possession of goods with the owner's consent can sell them, transferring a good title to the buyer.
•  Sale by Joint Owner:  One of the joint owners can sell goods, and the buyer acquires a good title if they act in good faith.
•  Sale under Voidable Contract:  A person in possession of goods under a voidable contract can sell them, and the buyer gets a good title.
•  Sale by Seller in Possession:  A seller in possession of goods after the property has passed to the buyer can sell them, and the buyer acquires a good title.
•  Sale by Buyer in Possession:  A buyer in possession of goods before the property has passed to them can sell, pledge, or dispose of the goods.
•  Re-sale by Unpaid Seller:  An unpaid seller exercising the right of lien or stoppage in transit can sell goods, transferring a good title to the second buyer.
•  Sale by Finder of Goods:  A finder of goods can sell them under certain circumstances, transferring a valid title to the buyer.
•  Sale by Pawnee:  A pawnee can sell goods and convey a good title to the buyer under specific provisions of the law.

Understanding Section 27 

• Section 27 addresses situations where goods are sold by someone who is not the owner and lacks the owner's consent to sell.
• In such cases, the buyer cannot obtain a better title to the goods than what the seller had.
• The key principle here is that the seller's authority to sell the goods is crucial. If the seller does not have the right to sell the goods, the buyer's title is limited to what the seller possessed.
• For example, if Peter steals a mobile phone from his office and sells it to John in good faith, John will not gain a valid title to the phone. He must return it to the original owner when demanded.
• This principle appears straightforward, but its enforcement can lead to innocent buyers suffering losses. To mitigate this, certain exceptions are provided to protect buyers' interests.

Exceptions to Section 27 

• Sale by a Mercantile Agent (Proviso to Section 27):  A mercantile agent in possession of goods or documents of title with the owner's consent can sell the goods in the ordinary course of business. The sale is valid if the buyer acts in good faith and has no reason to believe the seller lacks the right to sell.
• Sale by One of the Joint Owners (Section 28):  In joint ownership, if one owner sells goods with the co-owners' permission, the buyer acquires the property. This applies if the buyer acts in good faith and is unaware of the joint ownership.
• Sale by a Person in Possession under a Voidable Contract (Section 29):  If a person possesses goods under a contract voidable due to coercion, misrepresentation, fraud, or undue influence, and sells the goods before the contract is voided, the buyer obtains a good title.
• Sale by a Person Who Has Sold the Goods but Continues to Possess Them (Section 30):  A person who has sold goods but remains in possession can sell them to another buyer. If the buyer acts in good faith and is unaware of the prior sale, they acquire a good title.
• Sale by Buyer Obtaining Possession Before Property Vests in Them (Section 30(2)):  A buyer who obtains possession of goods before property passes to them, with the seller's permission, can sell, pledge, or dispose of the goods. If the second buyer obtains the goods in good faith and without notice of the seller's rights, they acquire a good title.
• Estoppel:  If the owner of goods is prevented by their conduct from denying the seller's authority to sell, the buyer obtains a good title. To establish estoppel, it must be shown that the owner actively led the seller to be perceived as authorized to sell the goods.
• Sale by an Unpaid Seller (Section 54(3)):  If an unpaid seller exercises their right of lien or stoppage in transit and sells the goods to another buyer, the second buyer acquires a good title against the original buyer.
• Sale under the Provisions of Other Acts:  Sales by an Official Receiver or Liquidator of a Company confer valid titles to purchasers. Purchases from a finder of goods can also result in valid titles under specific circumstances. A sale by a Pawnee can convey a good title to the buyer.